Metals trying higher although LME volume has been light

LME metals put in a quiet day on Friday with prices fluctuating between down 0.8 percent and up 0.9 percent on average, aluminium was the main loser – it closed down 0.6 percent, while lead closed up 0.6 percent. Copper closed up 0.2 percent at $6,411.50. Further poor US data weighed on sentiment, as it does not bode well for demand, while the weaker dollar provided some support.

Precious metals consolidated for most of Friday, they did receive a pick-up from the weaker US consumer sentiment and higher inflationary expectations number. The PGMs were the main gainers, while gold and silver consolidated, with gold closing at $1,223.50.

This morning lead is up the most with a 0.8 percent rise to $1,995, after a low on Friday of $1,964, tin is off 0.6 percent at $15,750, zinc is up 0.3 percent while the rest are little changed with copper at $6,420. Volume has been extremely light with just 1,693 lots traded.

Precious metals are firmer with silver up 0.9 percent at $17.62, platinum is up 0.4 percent at $1,166.10, gold and palladium are little changed with gold at $1,224.30.

In Shanghai, the July base metals contracts are mixed with nickel down 0.6 percent, zinc off 0.4 percent and aluminium off 0.1 percent, while lead is up 0.4 percent and tin and copper are up 0.1 percent, with copper at Rmb 45,980. Rebar is down 0.7 percent at Rmb 2,218.

Spot copper in Changjiang is up 0.2 percent at Rmb 46,070-46,150, the backwardation is at an equivalent of some $27 per tonne, while the LME/Shanghai copper arb ratio is at 1 to 7.17.

Gold and silver in Shanghai are firmer with silver up 1.1 percent and gold up 0.3 percent.

Equities – the Euro Stoxx 50 closed down 0.8 percent on Friday, while the Dow closed up 0.1 percent and Asia is mixed with the Nikkei up 0.7 percent, the Hang Seng is down one percent, the CSI 300 is unchanged and the Kospi is up 0.2 percent.

The dollar is holding just above recent lows, last at 93.37, the recent lows being 93.13, the euro is edging higher at 1.1436, sterling is consolidating, last at 1.5726, the yen is at 119.67, the aussie is weaker at 0.8021, the rouble is at 49.26, while the yuan is firmer at 6.1930.

Data already out today showed Japan’s revised industrial production dropping 0.8 percent and tertiary industrial activity dropping one percent, both wer worse than expected, but core machinery orders climbed 2.9 percent. Later we get Italian trade balance, the German Bundesbank monthly report and US NAHB housing market data. FOMC Charles Evans has also been speaking this morning, calling for no rate rise until 2016 – see table below for more details.

Copper has been holding up well in high ground as it consolidates, while the other metals have been pulling back as the market has adjusted/taken advantage of the recent strong gains. It now looks as though the pullbacks may have run their courses as prices trying higher this morning. The weaker dollar should help underpin the market – that said, we would reiterate that volume has been light.

Gold is leading the precious metals higher this morning with prices overcoming last week’s highs, silver and platinum are following, while palladium seems in less of a hurry. For now gold and the others look well placed to extend gains.

Overnight Performance

BST

06:39

+/-

+/- %

Lots

Cu

6420

8.5

0.1%

800

Al

1858

1

0.1%

179

Ni

13845

-20

-0.1%

277

Zn

2299

7.5

0.3%

322

Pb

1995

15.5

0.8%

101

Sn

15750

-90

-0.6%

14

Steel

395

0

0.0%

Total

Average (BM ex-Steel)

0.1%

1,693

Gold

1224.3

0.8

0.1%

Silver

17.62

0.16

0.9%

Platinum

1166.1

4.1

0.4%

Palladium

789

-1

-0.1%

Average PM

0.3%

SHFE Prices 06:50 BST

Change

% Change

Cu

45980

50

0.1%

AL

13305

-10

-0.1%

Zn

16835

-65

-0.4%

Pb

13440

55

0.4%

Ni

108830

-620

-0.6%

Sn

119300

130

0.1%

Average change (base metals)

-0.1%

Rebar

2218

-16

-0.7%

Au

245.45

0.75

0.3%

Ag

3750

39

1.1%

Economic Agenda

BST

Country

Data

ACTUAL

Expected

Previous

12:01am

UK

Rightmove HPI m/m

-0.1%

1.6%

12:50am

Japan

Core Machinery Orders m/m

2.9%

1.7%

-1.4%

5:30am

Japan

Revised Industrial Production m/m

-0.8%

-0.3%

-0.3%

5:34am

Japan

Tertiary Industry Activity m/m

-1.0%

-0.5%

0.4%

7:00am

US

FOMC Member Evans Speaks

9:00am

Italy

Italian Trade Balance

2.47B

3.54B

11:00am

Germany

German Buba Monthly Report

3:00pm

US

NAHB Housing Market Index

57

56

About William Adams

William Adams has been involved in the metals markets since 1982 – he has experience in many areas of the market from researching to trading and has worked in London, New York and Tokyo.